In the first half of 2021, mentions of ‘cybersecurity’ in earnings transcripts grew by 33%, with particularly stark growth since Q2 2020.
Rinaldo Pereira, a business fundamentals analyst at GlobalData, said cybersecurity is one of many tech-related terms increasingly finding their way into earnings reports. Works like “cloud” and “big data” have also been used more often since 2020, Pereira explained.
“The lasting shift in digital operations of both business and consumers, coupled with the rising incidences of data breaches, are driving mentions of ‘data security,”http://www.zdnet.com/”cloud security’ and ‘network security’ in 2021 earnings transcripts,” Pereira said.
“The World Bank’s August 2021 announcement of a Global Cybersecurity Fund is likely to drive more discussions around safer digital transitions, M&A and investment, with the rising complexity of cyberattacks.”
Cybersecurity-related risk mentions grew at a similar pace in 2020, increasing by about 30% compared to 2019.
Pereira added that words like “malware,”http://www.zdnet.com/”ransomware”, and “breach” also featured heavily in cybersecurity discussions in 2021 earnings transcripts. The terms were mostly used as organizations look to invest more in cybersecurity to head off future attacks.
Pereira told ZDNet that cybersecurity and terms related to it began to be featured in earnings transcripts in 2019 when several major hacks and breaches — including attacks on Facebook, Capital One and First American — drew headlines.
“The rise in cybersecurity discussions in 2021 can be attributed to the rising risk of ransomware and malware attacks due to the prolonged work from home trends and rising digital customer channels,” Pereira said.
“Companies also seem to be more driven towards procuring cybersecurity services as they continue to be worried of risks posed due to large-scale cyberattacks. It is expected that companies are likely to discuss more cybersecurity investment, M&A in filings with the rising complexity of cyberattacks and breaches and is proving to be a tailwind for the cybersecurity industry.”
Pereira explained that cyber events are increasingly having an impact on financial statements in recent years, and discussions around cyber insurance may also rise in the coming months.